a-1. From a legal perspective, what is the maximum amount of dividends per share the firm could pay? Note: Do not round intermediate calculations and round your answer to 2 decimat ploces. a-2. Is this realistic? Yes No b. In terms of cash availability, what is the maximum amount of dividends per share the firm could pay? Note: Do not round intermediate calculations and round your answer to 2 decimal places: c. Assume the firm earned an 22 percent return on stockholders' equity last year. If the board wishes to pay out 40 percent of earning in the form of dividends, how much will dividends per share be? Note: bo not round intermediate calculations and round your answer to 2 decimal places. Phillips Rock and Mud is trying to determine the maximum amount of cash dividends it can pay this year. Assume its balance sheet is as follows: a-1. From a legal perspective, what is the maximum amount of dividends per share the firm could pay? Note: Do not round intermediate calculations and round your answer to 2 decimal places. a-2. Is this realistic? Yes No b. In terms of cash availability, what is the maximum amount of dividends per share the firm could pay? Note: Do not round intermediate calculations and round your answer to 2 decimal places. Omni Telecom is trying to decide whether to increase its cash dividend immediately or use the funds to increase its future growth rate, P0=R3a R0= Price of the stock today D1= Dividend at the end of the first year D1=D0(1+g) D0= Dividend today K= Required rate of return g= Constant growth rate in dividends D0 is currently $2.10,Kois14 percent, and g is 6 percent. Under Plan A,D0 would be immediately increased to $2.60 and K, and g will remain unchanged Under Plan B, D0 will remain at $210 but g will go up to 7 percent and K, will remain unchanged. a. Compute P0 (price of the stock today) under Plan A. Note D1 will be equal to D0(1+g) or $2.60 (1.06). K,willequal 14 percent, and g will equal 6 percent. Note: Round your intermediate calculations and final answer to 2 decimal places. b. Compute R0 (price of the stock today) under Plan B. Note D1 will be equal to D0(1+g) or $2.10(1.07). K will be equal to 14 percent, and g will be equal to 7 percent. Note: Round your intermediate calculations and final answer to 2 decimal places. c. Which olan will produce the higher value? Plan B Plan A Wilson Pharmaceutcal' stock has done very well in the market during the last three years. It has risen from $55 to $80 per share. The firm's current statement of stockholdets' equity is as follows: a-1. How many shares would be outstanding after a two-for-one stock split? Note: Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23"). A-2. What would be its par value? Note: Do not round intermediate calculations and round your answer to 2 decimal ploces. b-1. How many shares would be outstanding atter a three-for-one stock split? Note: Do not round intermediate calculations. Input your answer in millions (e-g, $1,23 million should be entered as "1.237). b-2 What would be its par value? Note: Do not round intermediate calculations and round your answer to 2 decimal places. b-1. How mariy shares would be outstanding after a three-for-one stock split? Note: Do not round intermediate calculations. Input your answer in millions (e.9., \$1.23 million should be entered as "1.23"). b-2 What would be its par value? Note: Do not round intermediate calculations and round your answer to 2 decimal places. c. Assume that Wilson earned $16 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split? Note: Do not round intermediate calculations and round your answers to 2 decimal places. d. What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the priceearnings ratio of 5.00 stays the same) Note: Do not round intermediate calculations and round your answers to 2 decimal places
